New guidelines are being developed to safeguard consumer interests in Singapore where buy now, pay later (BNPL) services are seeing growing demand. These principles seek to prevent risks of "over-indebtedness) as more retailers offer such payment options via their online platforms. 

Targeted to be ready in the second half of 2022, the guidelines aimed to ensure BNPL would have a "positive impact" on Singapore consumers, Singapore Fintech Association (SFA) said in a statement Monday. The industry group added that it had established a working group to develop the BNPL framework.

The non-profit organisation has a membership of 800 comprising different stakeholders from the fintech sector, including large financial institutions, e-commerce marketplaces, payment platforms, and early-stage startups. 

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According to SFA, the BNPL working group consists of members Grab, Atome, and Hoolah and will operate under the guidance of industry regulator, Monetary Authority of Singapore (MAS). 

The group would develop a collection of documents to provide behavioural guidelines and enforcement measures for organisations that offer BNPL services. 

This framework would hold SFA members to the "highest ethical and professional standards" in conduct and practice, the association said. 

Specifically, the BNPL working group would develop principles that aimed to uphold fairness, transparency, and inclusivity. Decision-making processes should be transparent and outcomes should serve all consumers, particularly those in vulnerable circumstances, said SFA.  

The group also would look to promote a fair and ethical environment to safeguard consumer interests and build user confidence around BNPL services and providers. 

SFA noted that Singapore consumers had access to a growing number of BNPL services in recent years, as more merchants adopted the payment mode. These players included platforms such as Fave, Latitude Pay, Pace, and Split, which had joined SFA's BNPL working group as partners. 

BNPL services helped drive financial inclusion for underbanked and underserved segments, SFA said, adding that the emergence of such payment options democratised credit for the general population. 

MAS' assistant managing director for policy, payments, and financial crime, Loo Siew Yee, said: "BNPL schemes offered in Singapore today include some safeguards to mitigate the risk of excessive debt accumulation by consumers. The BNPL framework will be an important step forward to formalising standards for the industry to ensure consumers' interests continue to be protected."

Atome's regional head of compliance Leanne Lim noted that the framework should aim to drive "risk-appropriate" principles that protected consumer interests, while enabling "healthy and sustainable BNPL industry growth and innovation".

BNPL was projected to see a CAGR (compound annual growth rate) of 40% in Singapore, through to 2025, according to data from FIS's Worldpay 2022 Global Payments Report released last week.

The payment mode also would double its share of e-commerce transaction value in Singapore, from 4% last year to 8% in 2025. The study also pointed to BNPL as the fastest growing online payment method in the city-state, which e-commerce market was projected to see a 16% CAGR to hit$10.7 billion in 2025. 

Credit and charge cards were the main online payment mode last year, accounting for 42% of overall e-commerce transaction value. Digital wallets pushed 29% of transactions, while bank transfers accounted for 12%. 

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